An improved US performance and reduction in interest charges were the main reasons for a 5% rise in pre-tax profit at UKP12.7m for Erskine House Group Plc. However, the Sevenoaks, Kent-based office equipment supplier saw turnover down 6% to UKP178.9m and net profits fall 34.5% to UKP5.1m, after goodwill payments for the disposal of Erskine […]
An improved US performance and reduction in interest charges were the main reasons for a 5% rise in pre-tax profit at UKP12.7m for Erskine House Group Plc. However, the Sevenoaks, Kent-based office equipment supplier saw turnover down 6% to UKP178.9m and net profits fall 34.5% to UKP5.1m, after goodwill payments for the disposal of Erskine Office Systems, amounting to UKP3.4m and a UKP1.3m payment of deferred consideration for an earlier acquisition. The US operations managed to recover from last year’s disappointing results despite a difficult market, showing improvements in all business areas in country-wide terms. Turnover and profit both increased significantly and margins were improved due to careful cost controls. Nevertheless, it was the wholesale business that saw the most rapid expansion, increasing turnover by 40% and contribution to profit by 75%. Erskine is currently looking at ways to extend its scope from simply selling to small dealers in many states. Sales of new copiers were lower than last year, although there were some slight signs of an increase in confidence in the last quarter. Revenue from servicing and supplies sales rose modestly, but servicing costs were held close to last year’s level, contributing significantly to profits. Both the UK and Germany had a poor year with reduced turnover and profits. In the UK, the market experienced unrelieved depression, with copier sales being disappointingly low. This has caused Erskine to rethink the organisation of its UK sales teams. Cost-cutting, however, was not enough to offset the effect of lower volumes and margins. Servicing income rose slightly, benefiting from service contracts with customers, and well-contained operating costs pro-duced a very satisfactory contribution to profits from this area of the business. West German operations also found sales difficult. Subsequently, sales teams in Hamburg and Hanover were completely rebuilt, but sales declined still further during the change-round. Hamburg is now virtually at full strength, but Hanover will need several more months to reach this point. Even Frankfurt, previously the most significant contributor to profits, saw a fall due to intense competition and poor control of service expenses. Financial management within the German businesses has been strengthened with tighter control procedures now in place. The seven new operations in the east did, however, meet their turnover goals and managed to cover their costs in doing so.